The fintech start-up Acorns will go public by merging with Pioneer Merger Corp. (NASDAQ: PACX), a special purpose acquisition vehicle (SPAC), according to CNBC.
The deal values Acorns at $2.2 billion and is expected to be completed towards the end of the year. After the completion of the deal, Acorns will trade on the Nasdaq under the symbol — OAKS.
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Shares of Pioneer are up 2% in the morning trading after the announcement of the deal.
How does Acorns make money?
Acorns was founded in 2014 and one of the most popular products has been automatically investing the spare change on the credit and debit card transactions into index funds. Over time it has expanded into other product segments such as educational offerings, banking products, a debit card and an automated retirement account service.
According to the Acorns CEO Noah Kerner, the company saw record subscriber growth in the first quarter of this year with subscriptions rising to 4 million, double of what it was at the end of the last quarter of 2020.
The California-based startup generates 80% of its revenues from subscriptions with the rest coming from transaction fees and brand partnerships.
What did the management say on the announced merger?
On the decision to go public, Kerner said:
“Now was the time to go public to accelerate our growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most. We just saw this as an accelerant on that journey.â€
On the growing competition from trading apps and other fintech startups, he said, “we run our own race.
The company has raised capital from PayPal Ventures, BlackRock, Comcast Ventures, Ashton Kutcher, Jennifer Lopez and Dwayne Johnson. The private firm was valued at $1 billion last December.
